Chapter $5$ Activity Based Costing

Great Scott Company has been using direct labor costs as the basis for assigning

overhead to its products. Under this allocation system product A has been

assigned overhead of $$10\mathrm{.}80$ per unit while product $B$ has been assigned $$3\mathrm{.}60$

per unit. Management feels that an ABC system will provide a more accurate

allocation of the overhead costs and has collected the following cost pool and cost

driver information:

The following cost information pertains to the production of two of its Products, A and B

Use activity$-$based costing to calculate the unit cost for each product.

Comment on management's belief that the ABC system will generate an overhead

allocation that is more accurate than the system currently in use.